September 20, 2023

Moats, boats, and goats

Gregg Scoresby

*This article originally appeared in Gregg Scoresby's LinkedIn feed.

Moats are interesting, but not as interesting as boats and goats.


VCs always ask founders how they are going to build moats around their businesses to prevent future competition.I think the moat question is an interesting thought exercise, but building future moats for early-stage companies is rarely high on the short-term priority list.

Early-stage startups can't easily or quickly build certain moats like economies of scale, brand recognition, access to capital, switching costs, etc. Startup founders are just trying to get to product-market fit and then into repeatable revenue. For early-stage companies, the moat conversation is interesting, but years away from mattering. When a B2B SaaS founder is pitching PHX Ventures, I am far more interested in boats and goats than I am in moats.


Every big company thinks they have a moat around their big, boring business. What I really want to hear from early-stage founders is how they plan to get across their big competitors’ perceived moats. So tell me all about your boat. I want to hear exactly how you plan to quickly get across competitors’ moats, pull down their drawbridges, attack when they aren’t looking, and take their gold (customers).

I want to hear about your go-to-market and why customers will leave the big, old, familiar castle and jump in your little boat and sail with you over to your little castle that is still under construction.At the earliest stages, moats are theoretical but boat building is a reality. So, tell me about your awesome, partially built, agile little boat and how you are going to use it to pillage that big competitor’s castle. That's interesting.

(Note: Coincidentally, my friend Max Altschuler posted yesterday that GTM is the last true moat. I read it after I had already written this, but it's a great perspective. See my comments for the link.)


When I am getting to know a founder, I am always looking for signal that they really want to build a $100m ARR business. I want to know if a founder has the desire and drive to make their company the G.O.A.T. (Greatest Of All Time) in their industry. Does this founder have the competitive drive, work ethic, and desire of Michael Jordan, the NBA's GOAT?Does this founder have the discipline, mindset, and staying power of Tom Brady, the NFL's GOAT?

I need to know that a founder is not content to build a little rowboat and float around in someone else’s moat for years. They need to have the ambition to build a battleship and then go full navy when the time is right.Finding founders who sincerely want to build businesses that become the G.O.A.T. in their industry is more important and interesting to me than future theoretical moats.To be clear, building moats is a good thing. I am pro-moats. But in the early stages, I am far more interested in boat building and G.O.A.T. building than moat building.